TAXES CHECK BUILDING OF BUSINESS PREMISES

Northern Advocate, 23 March 1937, Page 5

TAXES CHECK BUILDING OF BUSINESS PREMISES

fSpecial to “Northern Advocated AUCKLAND, This Day. It- is stated by several business men in Auckland that the'building of new business premises and the reconstruction Of older ones, has stopped to all intents and purposes, as, owing to high taxation, these are no longer a profitable form of investment. The interest return on many big buildings is stated to be well below current rates. ' The new basis of graduated land tax, which has been increased from a flat rate of Id to a maximum of 6d or 21 per cent, on the capital value, and also income tax up to 7/6 in the £ , are claimed to have produced this situation. One man gave an illustration. In 1928 a Queen Street building was worth £94,000, and returned £5 14/6 per cent, on the investment after meeting operating costs.- The same in- . vestment today, taking into account present taxation, showed the net return to be £2 2/10 per cent. The position was serious, as some owners had not sufficient income to maintain buildings and meet interest on mortgages. Another effect of high taxation was the checking of the inflow of overseas capital. Prior to the rise in. the land tax, a considerable quantity was invested in property in the Dominion. , This had been checked. The outflow of capital was continuing steadily.